Debate on Annual Budget Statement 2022

MP He Ting Ru

Ms He Ting Ru (Sengkang): Mr Speaker, the last few years have sometimes felt like something straight out of a storybook: it was the best of times as we witnessed Singaporeans stepping up and volunteering to help the vulnerable amongst us during lockdown. It was the worst of times as we watched the early outbreak in the dormitories unfold, together with reports of terrible living conditions. It was the spring of hope, as we opened up to Phase 3 at the end of 2020. It was the winter of despair as, in particular, our key workers and restaurants suffered many reverses and took many steps back in our path towards reopening. Old certainties have been shaken, the script had to be torn up multiple times and, many a time, we have been left wondering – and perhaps still are – if the light at the end of the tunnel was actually that of an oncoming train.

And today, even as we struggle to stay afloat amidst what feels like endless price increases, we are also faced with understandable anxiety over climate change, the situation in the Ukraine, as we wonder whether we are witnessing the birth of the great conflict of our times. Today, more than ever, we have seen that the way we react when we are threatened, the actions we take when we are under pressure, are the most accurate reflection of our characters, of who we are as individuals, organisations and as a society.

It has not been easy. The various peaks and troughs which we have experienced since COVID-19 hit us have been exhausting and there will be more to come still. Our path to living with COVID-19 is a long one, and the fatigue experienced by many of us – from our frontline care workers, young parents, teachers, business owners – is real.

It is also troubling to hear pleas, both online and offline, for our leaders and policymakers to “come down from the ivory towers” to see what the situation is on the ground. The situation where our people feel and perceive that this Chamber is an ivory tower that is out of touch with reality is highly concerning and one which cannot be allowed to carry on. We should adopt a reflective approach on the possible drivers for this feeling amongst the public and work together to overcome it.

The Budget this year is entitled: “Charting Our New Way Forward Together”. It acknowledges that a New Way Forward is required and that we, in this House, have a duty to ensure that we do so together and that we do not leave anyone behind. This is something we can all get behind. Indeed, the Workers’ Party’s 2020 Election Manifesto’s preamble is entitled “A Singapore For All”. But the key is to ensure that the formulation of our policies and their effects on the ground move us decisively towards achieving this aim.

As a society, we need to decide together how best to invest in our people, how we should spend our tax dollars. After all, what does it say about us as a society that our senior residents come to us and tell us as a matter of course that they have requested for their medication dosages to be cut down because they cannot afford to pay for the full dosages that doctors have prescribed to them to treat their medical ailments? What does it say about us when our young parents have to make daily choices about how to apply the last dollars in their bank accounts as they cannot afford to buy both nappies and formula for their newborns when the family is hit by an unexpected job loss through no fault of their own?

These are real-life scenarios that all of us have seen our residents tackle. And while it is true that many helping hands are available, we are often told that much time, energy and stress is involved in navigating the support system. While these systems are in place to prevent abuse – and quite rightly so – we must also ask ourselves and continue to ask ourselves important questions: who we are as a people and what values do we stand for? Do we want our policies to empower Singaporeans to be our best selves or do we restrict Singaporeans from being our worst selves?

As we think about our new way forward together, it is still a key principle that Singaporeans must be self-reliant and we must be responsible. Is this consistent with our laws and policies that are formulated with the assumption that everyone is out there to game the system, on the look-out for unfair advantage for themselves to the detriment of others?

Does this approach not build a culture of Singaporeans trying to figure out what is legal or allowed, rather than applying their own mind to what make sense and is reasonable for both themselves and their fellow citizens?

Another clear example is the current debate surrounding our MC culture. The requirement for many employers for the doctor’s note for any absences from the workplace due to medical reasons stands in stark contrast to my experience in my first job in the city of London. Indeed, in the UK, employers are only allowed to ask for “fit notes” if employees are sick for more than seven days. Workers are asked to self-certify if they are sick for less than seven days. In fact, it was not unheard of for employers to offer “duvet days” to their employees: days off not because they are ill, but because employees sometimes just need some time to rest. These are often structured in a way that works best for their firm or industry, and have been shown to actually increase productivity and the mental and physical well-being of workers.

I am not advocating a wholesale copying of these approaches but I believe it is worth looking at our own labour market to see what positive changes we can make by studying these examples. To those who worry that these practices may result in people taking advantage, I observed that these practices appeared to work well in a highly dynamic, profitable and productive environment, as the common understanding was that people were serious about their jobs and were willing to work hard in order to progress in their careers.

Indeed, we cannot discount that the financial services coming out of London remain world-leading and innovative. If the argument that these are the things that could not work for Singapore, then we should take a long hard look at ourselves and ask “why not?”, followed by “how do we get there?”. How do we move to a society where people are empowered to exercise good judgement and be truly responsible? How do we ensure that people do not succumb to the temptation to indulge in corrupt practices because it is the right thing to do, and not because they have a high salary preventing them from being tempted.

Against this backdrop, I would like to turn to the most pressing problems and issues facing Singaporeans as we emerge from the COVID-19 years. In particular, our residents in Sengkang keenly feel the press of having to deal with lasting financial and social effects of the pandemic. Many of them are members of both the sandwich class and also the sandwich generation, and rising prices have and will continue to hit them hard while they struggle to provide for both the elderly and the very young in their families.

For these Singaporeans, the concept of inter-generational equity, or inter-generational solidarity, is extremely important in ensuring that one generation does not unduly bear the brunt of paying for expenditure of either a future or previous generation.

My colleagues have and will continue to touch on these issues. But while this concept may appear to be remote in Singapore at the moment, I would also note that as we restructure our economy and society, we should be wary of allowing a situation to develop where political outcomes and opinions are, or are seen to be divided strongly along inter-generational lines.

This has been seen in the West in the phenomenon of “Boomer blaming” for everything from Brexit to toxic work environments that degrade mental health, and only serves to exacerbate generational grievances. And we need to tackle this matter in a holistic way, ranging from creating more opportunities and spaces for the generations to learn from and support each other, and to ensure that our fiscal policies do not, and do not get interpreted as unfairly favouring one generation to the detriment of other generations.

Coming back to the issues surrounding the here and now, the ever-increasing cost of living is a topic that we hear feedback about time and again. Individuals, households and businesses have approached us for assistance with juggling the impact of relentless price increases. They have noted that a final 2% tax increase means a 28% increase in the amount of tax to be paid. They have also noted that there have already been price increases prior to the tax hike taking effect.

Just the other day, I noted during one of my estate walks that a Buangkok coffeeshop stall has put up a sign stating that rising prices have obliged them to increase the price of all items by 50 cents, which definitely far exceeds 2%. Furthermore, global brands such as Nestle have also sounded the alarm and announced that they will increase prices of their products – and these increments will not be captured by any GST Voucher scheme. I fear that the cascading and knock-on effect that such cost increases will be devastating on households already on a knife-edge.

Additionally, the war in the Ukraine, which has finally come to a head last week, will only lead to more supply chain disruptions and global price rises, and if it proves to be prolonged, it may end up having a far larger effect than predicted or catered for. We will not be spared in Singapore. 

Already crude oil has hit multi-year highs of over $100 a barrel and stock markets have reacted with volatility. Food prices will not be spared, as Russia and the Ukraine are major exporters of agricultural products, and Russia is one of the largest exporters of fertiliser globally – any drop in supply would lead to an increase in costs, which means farmers will pay more and have to pass it down to the end consumer. Russia is also a major supplier of natural gas, which has implications for us in Singapore, as around 95% of our energy needs are still powered by natural gas. This will only add to the woes currently experienced by our households and the businesses already grappling with huge increases in their energy bills. Notably, politicians in Germany are already advocating a natural gas reserve to shelter consumers from price shocks in the wake of the conflict. All this further underscores the need for our green transformation to take place urgently.

The situation is grim in the near-term. It is why the Workers’ Party cannot agree to a GST hike – whether delayed or staggered – especially as we believe not all other alternatives have been exhausted. Yet we also acknowledge that there are long-term pressures on our public purse strings, as we search for a shift towards long-term sustainability on all fronts, be it environmental, demographic or economic. After all, the world cannot keep growing endlessly, a fact illustrated by figures released in November last year which have shown that India’s fertility rate has dropped to below replacement rate for the first time ever.

In view of this, we also believe there is room to make our GST system less regressive beyond the current approach to further ease the burden on the lower-income groups. It is why we have to consider if our GST can start allowing for exemptions on certain essential items – treatment that is often seen in the case of other economies. The list of items should be kept to essentials such as food supplies, healthcare and care services, including childcare. This is what economies such as the UK, Australia and Japan currently do, and their experiences should inform us as we come up with our own list of exemptions that would be most beneficial to more vulnerable Singaporeans, and to avoid the pitfalls some countries have come across while deciding which items should be exempt and which not. Exempting items such as healthcare, infant care and childcare will also help to ease current and future cost pressures in industries that struggle to fill their manpower requirements with local workers. And I note there are stark implications for those industries with the foreign worker policies which are being tightened by the measures just announced in this Budget.

Additionally, I note that exemptions applying to children’s products and childcare would surely be welcome relief for parents or prospective parents and go towards addressing our low TFR, as financial concerns are often cited as one of the key reasons why people delay having children or decide not to have them. I need hardly add that raising our TFR is an existential problem for us that we have been unsuccessfully trying to solve for decades.

Consumption taxes are regressive by nature. While it is true that exempting essential items from GST is regressive, the alternative of keeping our existing system of no exemptions is likely to be even more regressive. This is because those on lower-income spend a far larger proportion of their income on consumption, which is always taxed in our case. Therefore, exempting key essential items from being taxed will significantly reduce the impact on lower-income groups. Additionally, while it is true that higher-income earners also benefit from such exemptions, these items, being essential in nature, should result in any derived benefits being self-limiting – after all, how much more rice can a rich person eat?

Another argument is that it is too expensive to implement these exemptions and that this will increase compliance costs for businesses. However, with the advent of AI and advances in technology, these costs should be much lower compared with when GST was first introduced and any upgrades to accounting or associated software should be a one-time cost for both Government and businesses. Additionally, compliance costs will likely be of far greater concern to smaller enterprises, and I note too that small businesses with turnovers of less than $1,000,000 are not required to register for GST.

How can it be that a country such as Singapore, which has long-prided ourselves on having targeted, efficient – even convoluted at times – policy-making, could shy away from implementing a system of GST-exempt items by saying that it is too much effort?

Turning now to how we measure our spending and our progress, I repeat previous calls made in this House to rethink the long-term sustainability of how we measure our progress.

Since its adoption in 1944 at the Bretton Woods conference as the formal measure of a country’s economy, GDP has proved to be a useful measure of the progress made by a country. And Singapore has done extremely well from our difficult beginnings.

Yet, in recent years, there has been a sense amongst many of us that GDP does not tell the full picture by any means. In particular, healthy GDP figures in 2021 and 2022, especially compared against the depressed bases in 2020, leave out the entire story of our country. There is a growing acknowledgement that beyond economic growth and survival, we should also thrive as a society, and be mindful of the impact that we have on our planet. GDP measurements alone fail to address these shifting values in our current world. GDP alone also does not capture the full picture of how we care for our people.

To illustrate this point, many may not realise that GDP does not measure things such as planting a tree, and that it does not measure the unpaid household and care labour undertaken by so many of our fellow Singaporeans. Yet one would be hard-pressed to argue that these do not matter in how we measure our progress as a society.

How do we, therefore, determine whether enough has been done to address concerns about, for example, mental health and well-being? After all, it is clear that there is much work to be done in Singapore, judging by the number of registered psychologists and psychiatrists in Singapore, especially in the public sector. There are also long waits to see counsellors in schools and tertiary education institutes, and concerns have been raised about the quality of support received.

These are but some examples of what should matter to us as we measure our society and how we measure our holistic progress. Many economists have been advocating for years that countries start developing a “dashboard” which contains a variety of other measures for how well an economy and society has been doing. 

Yes, GDP matters, but it does not do well in measuring our human, social and natural assets. A uniquely Singapore dashboard should, therefore, be developed and published together with GDP results. This can contain quarterly or annual measurements of our progress in terms of poverty reduction, social mobility and wealth distribution in an easy-to-understand way, allowing us as a people to understand at a glance what our targets are and the progress we have made or failed to make beyond GDP figures.

The dashboard should also contain measurements of the impact that we have on our environment and planetary health. Lessons can be learned from the introduction and abandonment of the “Green GDP” by China in the early part of the century. Our impact dashboard could, for example, contain indices relating to our emissions, land use changes, waste reduction efforts and have specific measures on how well we are doing in our transition to a green economy, a topic that my colleague Dennis Tan will elaborate more on.

Finally, we need to move from being merely a circular economy – as outlined by MTI in 2019 – to what I think of as a “circular society”. This means that while we aim for zero waste in terms of material use and energy resources, we also need to ensure we do not waste wealth, technology and knowledge, have a thriving knowledge commons and a strong culture of philanthropy.

The last point in particular is something I note that this Budget aims to promote through various tweaks to tax incentives and co-funding measures. To know how successful the increase in spending has been, philanthropic indicators on the dashboard could include details such as trends relating to donations and the nature of who is donating.

As little is currently known about how a circular economy or society can promote better social equity, more research is certainly needed – particularly in the local context. Narratives of a circular society can and should be developed, as the long-term sustainability of our country and planet is at stake. We must stop assuming that infinite economic growth is possible, and start shifting towards formally measuring our progress on other things that matter.

Mr Speaker, we are indeed at the crossroads, and it will be negligent of us not to put our heads together to figure out how best to chart out a sustainable way forward for Singapore. Headwinds will be strong and frequent in the years to come, and our people will need to demonstrate grit and fortitude to survive and thrive. The difficult environment we see ahead of us will test us and we should not add further to the financial and other burdens of our people by raising our GST when there are other available options. It is therefore regrettable that we must vote no to a GST increase, and therefore cannot support this Budget.

28 February 2022

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